Last summer, a financially beleaguered 47-unit cooperative at 30 West 90th Street in Manhattan made news when it converted to condominium status. That was not the first time a co-op converted to condo. A Teaneck, New Jersey co-op underwent the process two decades ago, and others—although not many—have done likewise over the years. But, it was the first time ever for such a metamorphosis in New York State.
The concept of co-op to condo conversion has garnered a lot of attention since the reconstitution of 30 West 90th Street, not only because it was an historic event but more significantly because of what happened immediately afterward. Before the conversion, "We had a substantial amount of leverage on a property that had depreciated significantly during the real estate market downturn," says John Kaplan, who was board president during the conversion.
"Apartments were virtually unsalable, a lot of people were forced to move out and sublet because they couldn't sell their apartments, and we were looking for a way to increase the liquidity of the apartments and to establish a less transient universe." Apparently, conversion to condo was the answer.
Within three months of the conversion, which Kaplan estimates took about two years and cost the co-op around $100,000, 15 units were sold where none had been sold for six years prior, average sales prices increased to market rate where they had previously been considerably below, and the monthly carrying costs decreased an average of 20 percent from what they had been when the building was a co-op.
Says Kenneth R. Jacobs, partner in the Manhattan law firm of Smith, Buss & Jacobs, LLP, and the attorney who represented the shareholders in the conversion process, converting co-ops to condos may be "the next evolution of a maturing market."